Half of America’s households (about 58 million) claim to be underinsured when it comes to life insurance, according to a new study from LIMRA. The study, “Trillion Dollar Baby Growing Up,” revealed as much as $17.5 trillion in untapped sales potential for the life insurance market.
With life insurance ownership at a historic low, the opportunity in the industry has nearly doubled since a similar study was conducted in 2004. At that time, LIMRA estimated life insurance sales could increase $9.5 trillion if the 48 million households claiming to be underinsured purchased the coverage they said was needed. The new numbers reveal an even wider gap between what is being purchased and what households claim to need to purchase.
"The underinsured life insurance market offers financial professionals tremendous opportunity, with 35 million underinsured middle market households in total — half of them (17 million) thinking they might be ready to buy life insurance in the next year,” says Cheryl Retzloff, senior research director, LIMRA Markets Research.
To land at these figures, LIMRA calculated the number of U.S. households that readily admitted they are underinsured combined with the number of households considering purchasing life insurance in the next 12 months. LIMRA measured the gap between the amount of life insurance they think most consumers should own and what they actually own for these two groups.
“The greatest challenge is not getting them to understand they need life insurance, but rather getting them to give it a high enough priority,” Retzloff says. “These consumers need to help to decide what type to buy, how much coverage they need and how life insurance can play an important role in their overall financial security.”
According to LIMRA, the top three factors preventing consumers from purchasing the life insurance they feel they need are money, uncertainty about what and how much to buy and simple procrastination. Speaking to that point, the study noted that 24% of consumers shopped for life insurance because a financial adviser initiated and suggested a need for it, while a quarter of those underinsured claimed never to have been approached about life insurance.
“Companies and producers need to find a better way to reach American households,” Retzloff says. “Clearly, there is a large market interested in buying life insurance.”
Justin Stephani writes for Insurance Networking News, a SourceMedia publication.
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